I think that the iPhone will begin to loosen up Nintendo's grip on the handheld market for several reasons. The main reason is because casuals who usually play on the DS will see the cheaper game on the iPhone , and see that the iPhone does a lot of stuff and go for it, but you already knew that.

Another good reason is because of the vast amount of console games appearing on the App Store. (If you want a list, tell me and I will make you one). Up and coming kid gamers will see thes games go for less than $15. They will eventually grow up to be hardcore gamers gaming on the iPhone, and there are plenty of games on the App Store. That could spell doom for Nintendo because the iTouch sells cheaper than the 3DS, and the games are cheap too. When the current generation of gamers retire, the up and coming generation will, like I said, game on the iPhone.

The iPhone won't have as big an effect on Sony because the NGP runs Android, but it will still affect Sony because the NGP looks like it will be priced fairly high. The games for it also look like they could be priced high.

BOTTOM LINE: Console ports that sell for under $15 will probably get the attention of up and coming gamers. The games themselves will only get better as the hardware gets better, so if Nintendo wants to stop the iPhone takeover, they need plenty of innovation. Fortunatly, Sony realizes that the iPhone takeover is happening and brought in Marcus PSP.

No it won't.

iPhone is a phone first and foremost. Its gaming capabilities are now and will always be leagues behind the current handhelds in terms of graphics, game selection (latest and greatest vs really old ports or gimped ports), and above all controls.

There is no difference between in the relationship of iPhone (and other smartphones) to handheld consoles as PCs to home consoles. Hell, in all reality, PCs are much more of a competitor because they can and do match or exceed every area as home consoles.

However, PCs have NEVER stunted the growth or acceptance of home consoles and there is no reason to think that the smartphone market will ever stunt the handheld market.

There are far more differences between these markets than simularities and as such, they will have little crossover. Most people will own a phone regardless of anything else and the people who'd consider buying a handheld console will do so anyways as their will always exist an experience that their phone simply cannot provide.

The iPhone/Android market is a threat to Sony but Nintendo? Not as much. Nintendo will always be king with the kids. There are parents out there who are crazy enough to get an iPhone or top of the line Android phone complete with an expensive 3 year contract for their kids but that's the really spoiled minority. Most parents would rather get their kid a DS. I think my brother recently bought my niece an iPhone at 15 but she's 15 and on top of that my brother spoils his princess more than the average parent does (so as long as he's not hitting me up for money all power to them.

While iOS took over Sony in the western mass market (someone posted a chart up on here showing that iOS market share overtook PSP in 2009) and Android is destined to be a big player in the game realm as well given their large and  growing market share (especially with the teenage and young adult demographics), Sony will always have a place in Japan and with hardcore gamers in the west though. Smartphones have atrocious battery life. They're not designed for heavy gaming at all. Even playing something low-fi like Game Dev Story on lowest brightness settings is a juice guzzler. To be fair my HTC Desire HD has shitty battery capacity (1230 mAh) and I suspect Android OS is a bigger juice guzzler than iOS. But I can't imagine the battery life being all that much better on the iPhone 4.

Considering that the whole point of having a phone is so that other people can reach you and you can make calls when ended, you have to make sure you have enough juice to get through the day. With my PSP I don't even have to worry. I leave it plugged into my wall at home and I've yet to find myself needing 3-4 hours when I'm on the go. Unless it's a flight or something, it's not an issue (Luckily I have a DS Lite for those occassions. Maybe I should invest in a Kindle one of these days. Kindle's battery life is second to none). And if you were to charge the battery every day or two that's really going to take it's toll on the battery's long-term lifespan and energy capacity (though I have seen third-party 1800 mAh replacement batteries from Hong Kong selling for $10 and the customer reviews of those seem positive. So maybe i can rest easy and abuse my smartphone's battery to my heart's content. lol)

Oh and the DS, PSP, 3DS and NGP all have actual buttons. That's always nice. And the $30-40 price tags are justified if the game is of premium quality. It's hard to beat Game Dev Story bang for your buck wise at $5 but I'd say something like a Persona 3 Portable is worth $40 easy (and I did see it on sale on PSN for $20 and the UMD version was on sale on amazon.ca for $20 or $25. Something like that.)

Well I've got to admit I've completely cut out PSP gaming and reduced DS gaming a bit because of my Ipod touch. The game quality is still higher on the consoles of course, but it's just more convenient (and cheaper) for me to just use the thing I'm already using as an MP3 player while I'm on the bus rather than have to pullout/carry a second device. That said I still use the DS for overnight stays, and some games are just so good I will play them even in a non-portable situation (Dragon quest 9 etc).

I think the 3DS will change this for me because I'm really interested in 3D gaming and Nintendo franchises are always a driver for me, but I think I'll skip the NGP.

bah, the itouch exists and sells well for a reason -- people use this device for a heck of a lot more than just to make phone calls.  it is first and formost a multi-media device of which gaming is a part.

i also think you're being a bit naive about how far behind IOs it is.  plants vs. zombies is on IOs and DS (and only 1/10 the price on IOs btw).  Iphone has a third person dead space -- wii doesn't even have one of those.

Next, your PC comparison is backwards:

 IOs and 3DS/NGP are competitors -- 3DS/NGP can match or exceed every (gaming) area of IOs devices.

home consoles and PCs are competitors -- PCs can match or exceed every (gaming) area of home consoles.

you shouldn't be asking if PCs hindered home consoles...you should be asking if home consoles hindered PC gaming.

Finally, let me just cap by saying this.  i'm a "core" gaming and as evidence i submit my dedicated status as a VGC poster and purchase dozens of games a year. 

I have in the last two years put more time and more money into my IOs games that i have into my DS.  i do this because it is a more convienent and more compelling device for the purpose of mobile gaming.  i underline mobile because i know i've seen you post about how bringing the "console" experience to mobile devices (ala psp, NPG) doesn't fit what the market wants.  the market wants pick-up-and-play games and IOs does that extreeeeemmlly well.

ignore apple at your own peril.  dedicated devices whether it be for gaming, reading, gps, phone, internet, ect are all trending away from importance.

this, xeria play is the way of the future

@kitler53,  your post is decent in supporting the smartphone argument.  However, I am sure you have heard this one before... Jack of all trades, master of none.  That is my view of the smartphone.  It will never be as good as a dedicated gaming machine because it isn't designed to be only a gaming machine.  Sure smartphones might lessen the sales of handheld devices but it will never replace them.  I am not saying ignore Apple or any other smartphone manufacture.  Nintendo will be in the handheld business a very long time.  Pokemon, Mario, etc...  Nintendo games will only be on Nintendo consoles (legal version at least, CD-i is the only exception).  Sure Nintendo needs to take lessons and improve.  They perhaps do their best work when under pressure from other competitors.

I don't know if I agree with that line.  I rarely use my iPhone as a phone, I probably use less than 10 minutes of phone time a month and maybe 15 text messages a month, I use it more as a toy and useful gadget.  I'm constantly playing random games on it or using any of the various really useful apps on it.

Saying the iPhone will always be leagues behind things like the DS and PSP is incredibly short sighted.  Mobile gmaing in its current state is still really new and has A LOT of room to grow.  Better and better games are constantly coming out and I think in the next five years mobile devices like the iPhone will easily rival or flat out beat the DS and PSP  of that time if they don't evolve.

Saying the iPhone will always be leagues behind the DS is pretty much the same as people that said 30 years ago that home consoles would never beat out the arcade experience or that gaming would even become that big of a thing.

I don't think I would call the iPhone a handheld gaming device either, I think it's just better to call it a device.

Among the 15-34 demographic I'd say dedicated handheld gaming systems are going to be trending down a lot. At home most gamers opt for the home consoles. I'm open to playing an enjoyable DS or PSP game just as much as I would be open to playing enjoyable home console games but I'm in the minority there. I primarily play my DS Lite and PSP at home, sometimes taking my PSP with me on commutes. I find playing Game Dev Story on my phone during commutes to be more convenient (like I said, gaming on a phone eats up the battery though). And Game Dev Story is a damn fine game in it's own right. If you have a iPhone/iPod Touch/iPad or Android OS device, get it now. Awesome addictive game development studio management sim.

Not always true.  If someone has a family and the dedicated gaming TV is being used for TV and movies, then it's hard to find time to game on it.  That's where handhelds come in and they're perfect for that.  Most of my iPhone, iPad, and DS gaming comes from when I'm sitting on the couch watching TV with my wife.

My sister gets almost all of her gaming in when her three kids are watching TV because it's almost always used by them.